Pfizer, the world's largest
pharmaceutical company, pleaded guilty yesterday and agreed to pay
$430 million to resolve criminal and civil charges that it paid
doctors to prescribe its epilepsy drug, Neurontin, to patients with
ailments that the drug was not federally approved to treat.

Of that settlement, $26.64
million will go to a former company adviser who brought a lawsuit
under a federal "whistleblower" law.

The company encouraged doctors to use Neurontin in patients with
bipolar disorder, a psychological condition, even though a study had
shown that the medicine was no better than a placebo in treating the
disorder. Other disorders for which the company illegally promoted
Neurontin included Lou Gehrig's disease, attention deficit disorder,
restless leg syndrome and drug and alcohol withdrawal seizures.

Although doctors are free to prescribe any federally approved
drug for whatever use they choose, pharmaceutical companies are not
allowed to promote drugs for nonapproved purposes. Neurontin was
initially approved to treat epileptic seizures in patients who had
failed to improve using other treatments, but it has become one of
the biggest-selling drugs in the world, with sales last year of $2.7
billion. Nearly 90 percent of the drug's sales continue to be for
ailments for which the drug is not an approved treatment, according
to recent surveys.

"This illegal and fraudulent promotion scheme corrupted the
information process relied upon by doctors in their medical
decision-making, thereby putting patients at risk," Michael
Sullivan, the U.S. attorney in Boston, said in a statement
yesterday. Pfizer, in a statement yesterday, said the illegal
marketing had been conducted by Warner-Lambert before Pfizer
acquired that company in 2000.

"Pfizer has cooperated fully with the government to resolve this
matter, which did not involve Pfizer practices or employees," the
company said.

Pfizer took a $427 million charge in January against its
fourth-quarter 2003 earnings to pay for the expected settlement. The
government calculated that the company's illegal promotions brought
it $150 million in ill-gotten gains. A standard multiplier was used
to come up with the $430 million fine.

The case is one of many undertaken in recent years by federal
prosecutors in Boston and Philadelphia who are examining efforts by
drug companies to market their drugs for unapproved uses and pay off
doctors for prescriptions. And while the pharmaceutical industry
recently adopted voluntary guidelines that have eliminated many of
the gifts and payments once routinely dispensed to doctors, the
industry's aggressive promotions continue.

While the agreement announced yesterday clears Pfizer of any
further liability in the Neurontin matter, the government may still
criminally charge former Warner-Lambert executives who concocted and
approved the plans, according to the settlement. Documents in the
case show that Warner-Lambert's illegal marketing activities were
approved by some of the company's top executives.

The case had its origins in 1996 when Dr. David P. Franklin quit
his job as a medical adviser to Warner-Lambert's sales staff, after
realizing that he was being asked to promote Neurontin well beyond
the condition for which federal drug regulators had approved it.
Franklin filed a lawsuit under a Civil War-era whistleblower
statute that allows private individuals to sue on behalf of the
government, with the prospect of sharing in any financial awards.

"I hope this encourages other employees of companies that see
corporate wrongdoing to come forward and expose it," his lawyer,
Thomas Greene, said yesterday.

In an interview, Franklin said he often sat in doctors' waiting
rooms with medical liaisons from other drug companies who were there
to do exactly what he was doing  promote unapproved uses of
medicines. "What we did was standard practice in the pharmaceutical
industry," Franklin said.

And although Franklin has been out of the pharmaceutical industry
for eight years  he is now a marketing executive with the medical
device maker Boston Scientific  he scoffed at the notion that
things have changed much in drug marketing. "Ninety percent of
Neurontin's sales are for patients for which there is no proof that
the drug works," he said. "There's been an explosion of off-label
drug use in the years since I left."

It is only after careful examinations of the results of expensive
clinical trials that federal drug regulators approve treatments for
specific medical conditions.

While doctors can freely prescribe approved drugs for any
treatment, drug companies must carefully restrict their
communications about these so-called off-label uses, limiting
themselves to handing out scientific articles, for example, or
hiring experts to give lectures to physicians about the unapproved
uses.

Warner-Lambert went beyond those strictures by flying doctors to
Hawaii, the 1996 Atlanta Olympics and Florida, paying them
consulting fees and plying them with expensive dinners at which
unapproved uses of Neurontin were discussed. The company also paid
some doctors to allow sales representatives to sit with them as they
saw patients.

The patient visits were the last straw for Franklin, he said. He
recalled that the company distributed a voice mail message from a
sales representative who described the day he had spent with a
physician and his patients. "The sales representative said he
explained to the physician with the patient right there on the table
why Neurontin was the best possible medicine," Franklin said.
"That's practicing medicine without a license."

These marketing practices, though, were extremely effective,
according to internal company documents. Doctors who attended
dinners given by the company to discuss unapproved uses of Neurontin
wrote 70 percent more prescriptions for the drug than those who did
not attend, one memorandum showed.

Part of the government's rationale for bringing the case was
Warner-Lambert's marketing schemes led physicians to prescribe to
Medicaid patients who should not have received the drug, costing
federal and state governments millions of dollars. Of the $430
million fine, $106 million will go to the 50 states, which share
with the federal government the costs of the Medicaid program.
Pfizer also agreed to abide by a corporate integrity agreement
ensuring that its employees are properly trained and supervised.